158. Franchising is popular in the United States, but legal barriers have limited its popularity in
foreign countries.
159. Global franchising is unlikely to experience major growth due to the high costs of
operations in global markets.
160. Franchising in global markets has demonstrated that high operating costs are
counterbalanced by high profit opportunities.
161. Franchisors sometimes pay reverse royalties to franchisees if it is evident that the
franchisor’s Internet sales have negatively impacted the profits of traditional bricks and mortar
franchisee businesses.
162. In a typical franchise agreement, the franchisor pays the franchisee a fee to manage its
company, and the two of them split the profits based on the percentages established in the
agreement.
163. Although franchise arrangements are a good source of income for the franchisee, these
businesses do not contribute significantly toward job creation.
164. It is correct to say that if a franchisor expects a 6% royalty fee on revenue, the franchisor
earns 6 cents on each dollar of revenue the franchisee generates.
165. The financial advantage to the parent company (the franchisor) in a franchise
arrangement is the upfront franchise fee and the collection of royalties if franchisees are
successful.
166. If a firm is advertising that it is selling franchise opportunities, the prospective franchisee
can be assured that the government has performed due diligence on this company, and has
deemed it a safe investment.
167. If a franchisee decides he wants out of the business, he is free to close up shop or sell
the business, just as if he were a sole proprietor or partnership outside of a franchise
arrangement.
168. If an established franchisor agrees to provide you the opportunity to become a franchisee
in its franchise system, the franchisor may also be willing to serve as a source of financing for
your operation.
169. According to the
Spotlight on Small Business
box, restaurants aren’t the only franchises
attractive to potential franchisees. Some prefer a low-cost and easily reproducible business
model.
170. In the
Adapting to Change
box, digital franchising is an impossible feat and could not be
successful.
171. Joshua wants to run his own business. A friend suggested that an inexpensive way to get
started is to buy a franchise, where he will have the freedom to run it exactly as he sees fit. As a
recent student of business, you concur with this advice.
172. Marilyn paid a sizeable franchise fee to obtain a Fontmaster Printers franchise in
Cleveland, Ohio. With the franchise fee behind her, she can look forward to using her creative
talents to make her print shop different and more attractive than other Fontmaster shops in the
Cleveland area.
173. Liam owns a Far Horizons Travel Agency franchise. As a franchisee, Liam is guaranteed
the right to retain all of his franchise’s revenues and profits.
174. Leanne, a franchisee, runs a chain of small restaurants with a well-known name. Due to
her hard work and people skills, her locations are doing quite well. She has noticed that several
other franchisees in the same franchise system have let their restaurants deteriorate, especially
in terms of lack of upgrades. Leanne should be concerned about this trend, since it eventually
could affect her own business.
175. Maria is already a successful franchisee with Nite Lite, a chain of “no frills” motels that
provide clean rooms and good service at affordable rates. The motel she currently operates is
located in Texas, but she is considering an opportunity to open another Nite Lite motel in
Canada. Although her costs of operating in a foreign nation may be higher, she has the benefit of
an expanding market and less competition.
176. A well-known franchised food chain was brought to its knees when several customers got
sick from tainted beef. Although the food chain recovered due to its quick and consistent action,
several franchisees sued the parent company for loss of sales. The franchisees experienced the
coattail effects of the bad publicity this event received.
177. Alex’s uncle recently passed away and left him an American Dream Real Estate franchise
business. Alex is not a licensed agent or broker, nor does he know anything about the real estate
business. He plans to sell his American Dream franchise to his friend Derek, who recently got his
real estate license. One of the advantages of owning a franchise is that you can decide to sell out
to anyone you believe is suitable for the business.
178. Your friend Brett called to tell you he just heard a sales pitch for a new website
development franchise where “he can get in for a few thousand dollars.” He wants to know if you
are ready to invest too. Although you lack expertise in graphic design or html programming, this
should be a safe investment since it is already advertised as a franchise system. It’s probably too
good to pass up.
179. A cooperative is simply another name for a corporation.
180. A cooperative consists of people with similar needs who pool their resources for mutual
gain.
181. It is not unusual for members of cooperatives to work for and help manage their
cooperative.
182. Farm cooperatives were originally established to help farmers increase their economic
power by acting as a group rather than as individuals.
183. The companies Blue Diamond, Ocean Spray, and Land O‘Lakes are well-known
cooperatives.
184. A disadvantage of farm cooperatives is that they are subject to higher tax rates than
corporations.
185. At one time there were many farm cooperatives, but more recently other forms of
business ownership have replaced them.
186. Originally, food cooperatives were formed to provide better prices for farmers. These
groups now cooperatively buy farm equipment and other products, and realize economies of
scale by banding together for these things.
187. Jocelyn belongs to a food cooperative in her community. As a member, she can expect to
have a vote in the election of the cooperative’s board of directors.
188. Jane has always disliked the notion that the customers, managers and workers of a
business are separate individuals with competing goals. She has joined with many other people
in her community who share this view to become a member, and part owner, of a child care
center. Jane and the other members operate the center for their own benefit, and each is
expected to work at the center at least 12 hours each month. The type of organization Jane
belongs to is known as a joint venture.
189. The __________ is the most common form of business ownership.
190. A ___________ is a form of business that is owned, and usually managed, by one person.
191. ____________ comprise about 20% of all businesses but account for about 81% of U.S.
business receipts.
192. To many businesspeople, one of the major attractions of a sole proprietorship is:
193. The __________ is usually the easiest form of business to start and end.
194. One of the major disadvantages of a sole proprietorship is the:
195. Starting a new business as a sole proprietorship:
196. In a sole proprietorship, the profits earned by the business are:
197. With respect to taxes, the sole proprietorship:
198. A significant disadvantage of owning a sole proprietorship is the:
199. When a sole proprietor dies:
200. Unlimited liability means:
201. Any debts or damages incurred by a firm organized as a sole proprietorship are: